Lenders look for several key attributes in small businesses that are seeking funding. If your small business application fails to meet expectations, you might be unable to access the capital that you need to drive development. Learning about how lenders judge applicants and preparing thoroughly can help you get the funding that you need to take your business to new heights.
Choose the Right Type of Funding Source
The right type of lending or financing option for you may depend on multiple factors. Your planned use of capital and how quickly you need it are two of the biggest.
The process for getting SBA loans takes longer than getting a new line of credit or accounts receivable financing. Traditional small business lending tends to have lower interest rates than some other lending models, but the application process is more intensive because it is more highly regulated.
You can choose from many different financial institutions with small business lending options. You don’t have to go through your local SBA chapter or your regular bank.
The online marketplace is growing, and some lenders are working to establish niches serving specific industries. Ideally, it would be best if you worked with a lender that has experience working with a company like yours.
Check Your Credit
Any loan application you submit will include a release for a lender to run a credit check on your company. If your score isn’t up to par at the time of your application, lenders may be unable to make you an offer.
Since you know a credit check is inevitable, you’d better know where you stand. Reviewing your credit before applying alerts you to deficiencies or errors that could hurt your approval odds. Staying on top of your credit enables you to correct mistakes on the tradelines in your report and work on building your business credit score.
Choose Collateral Carefully
If you’re looking to borrow a large sum, the collateral you use could greatly impact lenders’ attitudes toward working with you. You should never collateralize key assets if you have any doubts about your ability to keep up with your payment obligations.
Lastly, it is important to prepare detailed financial records in advance of applying for SBA loans. When you’re able to provide lenders with detailed information about your operating budget and revenue, it shows them that you’re managing money meticulously.